Challenges of Training Pre‐retirees to Make Sound Financial Planning Decisions

One of the more pressing societal challenges American institutions will face in the coming decades is to ensure that individuals who choose to leave the workforce have made wise financial decisions in preparation for retirement (Cutler, Gregg, & Lawton, 1992). The present study was designed to measure pre‐retirees’ ability to make accurate decisions about the affordability of retiring from regular employment. The two goals of the investigation were to measure whether knowledge of finance and retirement planning mediated the quality of individuals’ decisions, and to determine whether a brief educational training program could be used to improve decision performance. A within‐subjects design was employed in which subjects were asked to provide solutions to four realistic retirement planning decision scenarios: two prior to an educational intervention, and two following the intervention. Results indicate that although subjects’ knowledge of the domain increased significantly as a function of training, the overall quality of their decisions did not significantly improve from pretest to posttest. Implications of these findings are discussed in terms of both the individual and society.